Which of the following is known as “Principal Books of Accounts”?a)Ledgerb)Journalc)Trial balanced)Balance sheetCorrect answer is option 'A'. Can you explain this answer?

Question

Which of the following is known as &ldquo;Principal Books of Accounts&rdquo;?a)Ledgerb)Journalc)Trial balanced)Balance sheetCorrect answer is option 'A'. Can you explain this answer?

Answer

A ledger ✓ is the principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.

Answer

There is no list of options provided in the question. Can you please provide the options so that I can assist you further?

Answer

Any student of accountancy is familiar with two things of the subject,namely 'Journal' and 'Ledger'. the student is also familiar with the format of the two and the manner in which accounting entries are passed in them. However, very few students are aware of the concepts underlying them. they are equally unaware of the accounting procedure. This post is aimed at clearing that very concept.

First we must understand the role of journal and ledger in the accounting cycle. Accounting for any transaction begins with passing an entry in the journal. There are separate journals for recording different types of entries. these journals are collectively known as 'Books of prime entry','Books of original entry' and 'Subsidiary books'. These are called by the first two names because all transactions are first recorded in these books. The third name indicates that these are subsidiaries of the Journal. There are eight types of Subsidiary books.

Next comes Ledger. Ledger is the prepared with the total amounts of the different subsidiary books. for example, the total of purchase journal is posted to the debit side of purchase account. In other words, the totals of the different ledgers will be tansferred to ledger accounts of the same name. Ledger too is known by three names: 'Primary books' and 'Books of secondary entry' and 'Principal books'. Ledger is known as a primary book and principal book because it is from ledger balances that trial balance and final accounts are prepared. It is called a secondary book because it is prepared after the journal and on the former's basis. Hence it is subsidiary to the journal. The balances of the ledger accounts are used in preparation of the final accounts of the organisation.

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